Month: January 2013

It’s happening at a snail’s pace, but online poker is slowly becoming a reality in Nevada. Multiple companies have already been approved as operators or service providers. Meanwhile, various other Vegas heavy hitters like the Wynn Resorts, Hard Rock Hotel, and Treasure Island are in the queue for consideration from the Nevada Gaming Control Board.

Like it or not, online poker will go live in Nevada in the very near future. It can’t happen soon enough: Vegas is currently in starvation mode, with revenues down since the “Great Recession” started in 2008. The balance sheets of domestic casino operators are slowly recovering, but only after significant layoffs and cutbacks. Operators with International presences are faring much better: Wynn Resorts, The Venetian, and others have collected big paychecks courtesy of Macau, where Chinese officials only recently allowed foreign companies to setup shop.

Here is a list of Approved Online Poker License holders in Nevada as of January 30th, 2013. Note that the Nevada Gaming Control board distinguishes each licensee based on the particular business they operate: service provider, operator, affiliate, technology provider, auditing, etc.

IGT – Approved for service provider license on June 21, 2012.Bally Technologies – Approved for a service provider license on June 21, 2012.Shuffle Master – Approved for a service provider license on July 26, 2012.Neteffect Networks – Approved for a service provider license on July 26, 2012 (hosting services for online poker websites)South Point Poker – Approved for an operator license on August 23, 2012.Monarch Casino and Resort – Approved for an operator license on August 23, 2012.Global Cash Access Holdings – Approved as a service provider on August 23, 2012.WMS Industries – Approved for a service provider license on September 20, 2012.American Casino & Entertainment Properties – Approved for an operator license on September 20, 2012.PokerTrip – Approved for an affiliate marketing license on September 20, 2012.Boyd Gaming – Approved for an operator license on October 18, 2012.GNLV – Approved for an operator license on October 18, 2012.Fertitta Interactive – Approved for an operator license and software provider on October 18, 2012.MGM Resorts – Approved for an operator license on November 15, 2012.Z4 – Approved for a software provider and manufacturer on November 15, 2012.CAMS – Approved as a service provider on November 15, 2012.Caesars Entertainment – Approved for an operator license on December 20, 2012.Golden Gaming – Approved for an operator license on January 24, 2013.Lottomatica – Approved as a service provider on January 24, 2013.

The first affiliate marketing license was approved for PokerTrip Enterprises. When this was announced, affiliates in the online gambling community had mixed reactions. On one hand, it shows the Nevada Gaming Board is open to affiliate marketing for online gambling, but on the other, one must jump through significant legal, corporate, and background investigations in order to qualify. The old days of joining a gaming affiliate program and posting its banners on your website within 20 minutes are gone. If online gambling becomes legal in the USA, affiliates will likely have to follow PokerTrip Enterprises’ lead and get licensed first.

While licensing affiliates does make sense from a regulatory standpoint, it does erect substantial financial barriers to entering the legalized online poker market. In various interviews at online gaming industry websites, PokerTrips Enterprises indicated substantial time, patience, and legal information was required to get their license. Translation: you’re going to need $$$ to get all the paperwork together and $$$ to hire attorneys to advocate on your behalf. Those wishing to promote offshore online gaming sites, however, need only have an address, bank account, and a productive website.

Finally, it’s important to clarify how PokerTrip Enterprises – and other subsequently approved affiliates – will get compensated. Although the exact payment plays aren’t clear yet, it appears Nevada Online Poker operators would pay affiliates modeled after a CPA (Cost Per Acquisition) program. TwinSpiresAffiliates.com, the affiliate program for Churchill Downs that allows webmasters to market legal online horse betting around the USA, pays a measly $60 per player if you send 10 or less depositors, which is the case for most smaller affiliates. If you can send more than 10 players per month, you’ll get a $10 raise up to 25 new accounts, or additional $20 ($80 per player) above and beyond 26. Remember, in order to get a higher CPA, you have to send a double-digit amount of players EACH month. For example, you might send 30 depositors in May for the Kentucky derby, earning you $80 per acquisition; however a slow June with only 8 players drops your CPA back to $60.

In the eventual “legal” online gambling world, affiliate revenue share programs will be a thing of the past. Low-ball CPAs from stingy corporate casino owners will be the unfortunate new reality.

Keep tabs on who gets licensed in Nevada and how. 888.com has organized a holding company to get licensed in Nevada, even though it wasn’t so long ago that 888.com stopped accepting USA players to avoid USA Department of Justice legal action. It goes to show that if you have the money to create the necessary legal corporate entities in the United States, you’re good to go.

Otherwise, affiliates and poker operators on a budget will have two choices: 1) Continue to promote offshore properties, or 2) Find a new way to make money.

While the United States has largely been distracted by the 2012 Election Cycle, economic hardship, and political strife, the online gambling world has continued to cook along, slowly edging its way to USA soil.

Last week we chronicled the story of PokerStars and its recent bid to buy an Atlantic City Casino in New Jersey. The poker giant has placed a bid on the Atlantic Club Casino, perhaps as a way to diversify its investments. Industry experts think otherwise: PokerStars is quietly asserting its formidable brand and finances into the troubled New Jersey gambling market, with the long term goal of eventually being the first online poker and/or online casino operator in the state. Governor Chris Christie is already causing quite a stir with his push to legalize brick and mortar sports betting, once a taboo subject even for New Jersey. Now, it’s a legitimate possibility.

That brings us to Calvin Ayre, a Canadian national and one of the most influential and successful individuals in the offshore gambling industry. Before going live, Ayre worked a pig farm in rural Canada. When that got old he decided to start an online business. Ayre tapped into internet gold in 1994 when he and some business associates founded Bodog.com. Initially, the website was first and foremost an online sportsbook accepting players from the United States, Canada and elsewhere. It slowly evolved into a full service online gambling site, offering sports betting, casino games, poker, a horse race book, and other forms of wagering. By 2006, Forbes Magazine proclaimed him to be a billionaire. He was featured on the cover of their magazine as a pioneer of offshore internet gambling.

Unfortunately for Ayre, American law enforcement felt otherwise about his success. The 2006 UIGEA (Unlawful Internet Gambling Enforcement Act) was initially considered a death knell for offshore gambling businesses largely based in Costa Rica, Panama, Curacao, and other Caribbean jurisdictions. The UIGEA prohibited United States banks from processing financial transactions to offshore gambling sites. Despite this obstacle, internet gaming continued to thrive, taking advantage of 3rd party payment processing companies that sometimes resorted to crooked means to get money through the door. These dubious practices only further emboldened USA law enforcement, who started unsealing indictments against major operators and payment processors in the ensuing years.

Ayre wisely decided it was time for a break from the limelight. Gracing the cover of Forbes is a fairly blatant b*tch slap to the United States government, and he knew they had him in their crosshairs. Ayre quietly began breaking the company into various different enterprises, allowing different individuals and investors to blur his public persona as a big time offshore gambling operator. The name “Bodog” itself became an intellectual property company licensing its brand to other business ventures. Bodog lent its name to Bodog Fights, Bodog Music, Bodog Coffee, Bodog Poker, and Bodog UK. It also started operating in the lucrative Asian market under the name Haydock Sports/Bodog Asia.

The Morris Mohawk Gaming Group, regulated by the Kahnawake Gaming Commission continued to offer sports betting, casino, poker, and horse betting to the United States through 2011 until it let its licensing agreement with BodogBrand.com expire. Industry insiders felt this was a preemptive action on MMGG’s part to avoid trouble with United States law enforcement and domain name seizures.

Shortly afterwards, United States law enforcement in Maryland seized the Bodog.com domain name on February 26, 2012, in addition to indicting Ayre himself for money laundering, operating an illegal offshore gambling site, and various violations of the UIGEA. Morris Mohawk quickly regrouped and rebranded as Bovada.lv. The odd name is a play on the state name of Nevada, with the domain extension of .lv meant to abbreviate Las Vegas. Domain name and branding changes for any internet business are logistical nightmares, but in the end, “Bovada” and the MMGG prevailed: it’s new domain name was memorable despite the awkward .lv extension. Fortunately, .lv domain names are assigned by NIC Latvia, virtually untouchable by any United States legal action. To date, Morris Mohawk Gaming Group never actually relinquished its ownership of the erstwhile Bodog sportsbook and its millions of players, but instead reopened under a different name. Bodog Affiliates became BettingPartners.com, and preexisting affiliates’ players were all migrated to a new tracking software platform. It continues to be “business as usual” for MMGG.

Life for Ayre is now much like the famous 2002 movie, “Catch Me If You Can”, except in his view, he’s being chased for being a successful internet entrepreneur, NOT like the movie’s character Frank Abagnale portrayed by Leonard Dicaprio as an unscrupulous conman. Whether or not you believe Ayre is really guilty of anything other than being on the wrong side of shortsighted legislation is a matter of personal opinion. For most, his status as a wanted fugitive of the United States is the stuff of legends. Although his exact whereabouts are unknown, he does frequent Costa Rica, some European countries, and the Philippines where Bodog Asia is headquartered.

Ayre continues to fund the Calvin Ayre Foundation, a charity aimed at alleviating hunger, fixing social problems, and improving animal welfare. The foundation has been active since 2005 and isn’t a late effort to gain favor with the United States. Costa Rica has benefited from Ayre’s altruism greatly, and he remains a welcomed individual in their country. At one point Bodog had a major operations center in the capital city of San Jose, but it is unclear whether or not they continue to be a large local employer.

Calvin Ayre also started his own online gambling news blog, in part to promote his brand and to act as an informational resource for the offshore gaming industry. In the beginning the website was Ayre’s personal platform to the world, but now it is a major business of its own, with multiple editors, contributors, and support staff. Many people now get their gambling news from Ayre’s website, particularly his notes about investment opportunities and other emerging markets around the world.

What does the future hold for this self-described “megalomaniac”? 🙂 First things first: get law enforcement off his back. PokerStars settled its Civil Case with the United States for an undisclosed sum of money, and now they’re glad-handing their way onto the Atlantic City boardwalk. Ayre might be wise to settle up with the government and begin anew. Many industry experts believe legalized online gambling in the USA – at the state or federal level – is just a few years off. Undoubtedly, if Ayre’s plate is clean, he’ll be one of the first to open up for business legally in the USA, even if its under the auspices of a holding company. His drive, intelligence, and innovation makes him a major player in any jurisdiction where online gambling is permissible, and the United States will be no different once it realizes a steady new form of tax revenue *might* be legal online gambling.